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Written by: Alex Sauickie | AdvicePay
Firms Must Now Consider Broader Functionality When Selecting a Technology Partner
For years, financial advisory firms, including broker-dealers, banks, and insurance companies, have had to answer the pressing question: Do you build your tech solutions or buy them?
In many ways, that question is no longer relevant. The prevailing trend, not just within the financial sector but across industries in general, is a shift towards focusing on their core business and partnering with experts for the rest. Few financial providers have their own proprietary CRM systems nor would they build one internally today; they generally no longer maintain large data centers in the basement (they outsource to Amazon Web Services or Microsoft Azure), and they know that to get the best tech platform, they need to partner with a provider capable of delivering not only the most advanced technology but also an intuitive user experience.
Today, the debate isn’t so much about building versus buying but about more intricate questions. How well does your platform integrate with third-party providers? Is it customizable and configurable? Does it bring invaluable knowledge and expertise to the table? And if client-facing, does it facilitate seamless collaboration between advisors and investors in a professional manner?
When looking for a technology platform, financial advisory firms should consider three key factors: functionality, expertise, and return on investment.
First and foremost, fintech platforms must provide state-of-the-art technology to allow advisors to spend their time on their most crucial task: serving and supporting their clients. If advisors don’t have access to the proper tools to do this, they will leave your firm and seek opportunities elsewhere. A tech platform must be user-friendly, intuitive and efficient. It should also be customizable and configurable. Can users pick and choose the features they want to use? How receptive is the partner to incorporating user feedback for continuous technology improvements? Is the system fully integrated with other third-party providers? For example, will the investor information in the advisor’s CRM automatically populate within their planning tool, eliminating manual data entry?
When evaluating potential providers, firms should consider both the technology and how the provider intends to service the platform on an ongoing basis. Technology isn’t a set-it-and-forget-it proposition; it’s in a constant state of evolution. If firms want to be able to outpace the competition, they need to partner with a service provider equipped to make continuous releases and updates.
Return on investment is also a critical factor. By investing in the right technology, firms can improve efficiency and eliminate costs associated with manual data-entry, paperwork, and bill collection. These can then be reinvested in areas that more directly contribute to growth for the firm. We’ve seen companies redirect entire teams to more productive roles in an organization with the addition of a well-designed technology platform.
It’s crucial to not perceive new technology as an expense. Instead, firms should look at whether the price of a new piece of technology will allow them to broaden their scope, potentially leading to the addition of new revenue streams.
Finally, firms must look to their technology to provide a level of expertise. Typically, fintech platforms have provided compliance support, but today’s tools can do much more. When you invest in a technology resource, you should have access to a partner who knows everything about a particular space, capable of guiding your team through the entire process, start to finish.
Consider the journey of our fee-for-service platform. We knew that many broker-dealers wanted to be able to offer fee-based financial planning services, but they simply didn’t know where to begin. However, once they launched AdvicePay, within one year, they saw an average of 457% increase in subscription-based revenue and a 1,060% increase in advisors added to AdvicePay. What started out as a disruptor has now become a cornerstone of their go-to-market strategy and is one of the fastest growing segments in financial services.
According to Cerulli, financial planning is on the rise, with about half of advisors offering those services compared to a third in the previous five years. What’s more, about 36% of advisors are charging a fixed fee for planning services, with those figures expected to increase in the coming years. As more advisors enter the fee-based-planning space, there will certainly be trial and error, but the right technology tool can help make the transition more seamless.
With the build-vs-buy question finally put to rest, firms can now move onto deeper issues, evaluating fintech platforms based on their ability to provide user friendly, state-of-the-art technology that reduces costs and provides access to knowledgeable professionals. This, in turn, equips them to better serve clients, recruit next-gen talent, and increase revenue.
Alex Sauickie is chief executive officer of AdvicePay, the leading platform for processing payments and overseeing compliance of fee-for-service financial planning.
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